Casella Waste Systems reports revenue growth for Q3 2018

Casella Waste Systems Inc., a regional solid waste, recycling and resource management services company based in Rutland, Vermont, has reported its financial results for the three-month period ended Sept. 30, 2018.

Among the highlights for the quarter, according to Casella Waste Systems, was revenue growth of 7.8 percent, or 12.6 million, compared with the third quarter of 2017, for a total revenue of $172.8 million for the quarter.

Casella Waste Systems reports net income of $22.3 million for the quarter, an increase of $10.2 million from the same period in 2017. In addition, adjusted net income was $13.4 million for the quarter, an increase of $0.3 million from the same period in 2017.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $42.4 million for the quarter, up $2.9 million, or 7.3 percent, from the same period in 2017.

Net cash provided by operating activities was $89.9 million year to date, an increase of $10.8 million, or 13.7 percent, from the same period in 2017, according to the company.

Normalized free cash flow was $37.3 million year to date, which is $2.9 million, or 8.5 percent, more than in the third quarter of 2017.

Casella Waste Systems says it has acquired approximately $70 million of annualized revenue year to date and is on track to exceed its target range for 2018.

“We had another strong operational quarter, as we continued to execute well against our key strategies as part of our 2021 plan,” says John W. Casella, chairman and CEO of Casella Waste Systems. “We remain focused on driving Normalized Free Cash Flow growth by increasing landfill returns, improving collection profitability, creating incremental value through resource solutions, using technology to drive profitable growth and efficiencies, and efficiently allocating capital for strategic growth.”

“Our disciplined solid waste pricing programs continue to drive significant value, with collection pricing up 5.7 percent and landfill pricing up 4.1 percent year-over-year in the third quarter,” Casella adds. “Solid waste volumes were down 1 percent year-over-year in the third quarter, with 0.7 percent of the decline resulting from a fire related business interruption at a transfer station, and the remainder associated with our disciplined pricing strategy that is focused on balancing volume growth with higher pricing.”

The company says it continues growing its acquisition pipeline, including two acquisitions that closed Nov. 1.

“We are focused on acquiring well run businesses in strategic markets that will drive additional internalization to our landfills and operating synergies,” Casella says. “We are also focused on more effectively optimizing waste placement around the northeast as the ever-tightening disposal market is creating additional opportunity to source new volumes at higher prices. We believe that there is additional opportunity to drive cash flow growth across our footprint through strategic growth.”

The third quarter included recovery of a $10 million Southbridge Landfill environmental insurance settlement, partially offset by $0.5 million of legal expenses associated with the Southbridge Landfill closure, Casella Waste Systems reports. The same period in 2017 included a $.08 million Southbridge Landfill closure charge.

“Given the continued strength in our solid waste, organics and customer solutions operations combined with our success advancing acquisition activity, we have increased our revenue, adjusted EBITDA and normalized free cash flow guidance ranges for the fiscal year ending Dec. 31, 2018,” Casella says. “Recycling commodity prices stabilized early in the third quarter and began to modestly improve throughout the quarter. We have forecasted commodity prices to stay flat at the current low levels for the remainder of 2018.”

The estimated ranges are:

revenue between $642 million and $652 million (increased from a range of $630 million to $640 million);

CP Group, the San Diego-based recycling solutions provider and equipment manufacturer, unveiled its Virtual MRF over a year ago. Now, for the first time, the company has announced it will be on display internationally at Residuos Expo 2018 in Guadalajara, Mexico.

The Virtual MRF is a virtual reality simulation that uses two hand-held controls and a virtual reality headset to allow users to navigate through a life-size computer-generated model of a material recovery facility (MRF) in real time.

“We are very excited to showcase our VR technology at this monumental show,” Jesus Vargas, sales drafting manager for CP Group, says. “CP Group was the first to bring VR into the recycling equipment manufacturing industry. Our Virtual MRF system aids our engineers in developing sort systems. It also provides to our customers a very concrete sense of what their facility will look like long before anything is actually built.”

Residuos Expo, Latin America’s largest waste industry conference, is occurring concurrently with Expo Plasticos, with a combined expected attendance of 18,000 industry professionals. The show runs from Nov. 7-9.

Vargas and other members of the CP Group team will be running Virtual MRF demonstrations throughout Residuos Expo at booth No. 2112.

Caruth Institute for Entrepreneurship ranks the top 100 Dallas entrepreneurial companies annually based on percentage growth and absolute dollar growth over the previous three years. The institute, working with the accounting firm BKD LLP CPAs and Advisors, examined sales from hundreds of companies for 2015 to 2017. The winners represent a broad spectrum of Dallas-area businesses. The rankings were revealed at an awards ceremony at The Omni Hotel in Downtown Dallas Thursday, Nov. 1.

The companies named to the Dallas 100 collectively generated $3.3 billion in sales in 2017, according to Jerry White, the Linda A. and Kenneth R. Morris Endowed Director of the Caruth Institute for Entrepreneurship at SMU Cox. Collectively, the companies grew at an average annual growth rate of 87 percent from 2015 to 2017. Together, they created 11,096 jobs in that same period.

White says, “These companies are amazing growth machines. They can create a fantastic number of jobs and pump hundreds of millions of dollars into our economy. For 28 years, the Caruth Institute at SMU Cox has honored the critical role of entrepreneurship in the DFW economy, which has thrived specifically because of its long history of entrepreneurial spirit.”

To qualify for the Dallas 100, a company must meet various criteria, including a three-year sales history that reflects growth and have credit and character satisfactory to the Dallas 100.

“We are excited to be selected as a two-time winner for such a prestigious award,” says Larry Olschwanger, president and founder of ScrapSource. “We are fortunate to have assembled a team of professionals with such unique industry experience. We also acknowledge and thank our many clients that have trusted our company to handle their disposition of all scrap metals generated by their manufacturing plants”.

ScrapSource was founded in 2010 and seeks to help companies make smarter scrap recycling decisions while improving revenue and implementing industry best practices.

WestRock completes acquisition of KapStone

The company expects to achieve about $200 million in synergies, performance by the end of fiscal 2021.

“I am pleased that we have completed the acquisition of KapStone Paper and Packaging, and I welcome our new teammates to WestRock,” says Steve Voorhees, CEO of WestRock, in a company news release. “The addition of KapStone enhances our differentiated portfolio of paper and packaging solutions and will enable us to serve our customers better across our system. We look forward to delivering on the opportunities that the addition of KapStone provides for our team, our customers and our stockholders.”

According to a WestRock news release, the company expects to achieve approximately $200 million in synergies and performance improvements by the end of fiscal 2021 through the integration of the former KapStone operations into WestRock’s corrugated business. WestRock reports that the acquisition also strengthens its presence on the West Coast of the United States and expands its portfolio of differentiated paper and packaging solutions with the addition of more attractive paper grades and distribution capabilities.

WestRock financed the transaction through the issuance of debt from a bank term loan facility, existing credit commitments and cash on hand, according to a WestRock news release. Lazard served as lead investment bank and financial advisor to WestRock. Wells Fargo also acted as a financial advisor to WestRock and is the agent for a syndicate of banks that provided the financing for the transaction. Cravath, Swaine & Moore LLP acted as legal advisor to WestRock, and King and Spalding LLP served as antitrust counsel to WestRock.

Investments pay off for Novelis

Atlanta-based Novelis Inc., a world leader in aluminum rolling and recycling, has reported net income attributable to its common shareholder of $116 million for the second quarter of fiscal 2019, which compares to $307 million in the prior-year period. Excluding tax-effected special items in both periods, the largest being a $318 million pretax gain related to the Ulsan Aluminum Ltd. joint venture in the prior year, the company reported net income of $122 million for the quarter, an increase from $78 million in the prior-year period.

The increase in net income, excluding special items, is largely because of an 18 percent increase in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) over the prior year to $355 million in the second quarter of fiscal 2019. Ongoing efforts to optimize its investments to increase rolling, automotive finishing and recycling capacity, combined with favorable market conditions, have resulted in higher shipments of premium products, operating cost efficiencies and favorable metal costs. Adjusted EBITDA per ton reached $440 in the quarter. It was $377 per ton in the prior-year period.

Net sales increased 12 percent over the prior year to $3.1 billion for the second quarter of fiscal 2019, driven by higher average aluminum prices, higher total shipments and a more favorable product mix, the company say. Shipments of flat-rolled products increased 1 percent to a record high of 807,000 tons.

"Continued strong customer demand for lightweight, high-strength aluminum has resulted in another strong quarter," says Steve Fisher, president and CEO of Novelis. "Moving forward, we are focusing on safely bringing our recent automotive investments online, enhancing the way we engage with customers and leveraging our R&D capabilities in order to provide solutions that help meet their design, performance and sustainability goals."

The company reports $108 million of free cash flow for the second quarter of fiscal 2019, net of $60 million in capital expenditures. Year-to-date free cash flow improved $80 million over the prior year to $104 million. This increase was driven primarily by higher adjusted EBITDA, partially offset by higher taxes and capital expenditures, according to Novelis.

"Our continued strong financial performance and operating cash flow generation has allowed us to strategically add capacity to capture growing demand, while continuing to improve net leverage to 2.8 times at the end of the second quarter," says Devinder Ahuja, senior vice president and chief financial officer for Novelis.

As of Sept. 30, 2018, the company said it had a strong liquidity position of $1.7 billion.

On July 26, 2018, Novelis announced it had signed a definitive agreement to acquire Aleris Corp., headquartered in Cleveland. The acquisition continues to progress as expected, according to Novelis, and remains on track to close nine to 15 months from the date of the announcement, as previously communicated, subject to customary closing conditions and regulatory approvals.

Nov. 1, Novelis secured financing for the pending Aleris acquisition by entering into commitment letters with a group of banks to provide up to $775 million of an incremental term loan with a five year maturity and up to a $1.5 billion short-term bridge loan with a one year maturity. The company says it expects to replace the bridge loan with permanent financing soon after closing, depending on market conditions.